RE: Implication of IMF/World Bank Allowing Sovereign Debt
From: Jim Sinclair
Date: Sunday, September 29, 2002
What effect does the latest proposal by the IMF/World Bank of allowing sovereign debt to be bankrupted have on the
1) U.S. Banking System?
A: You can now expect bankrupt developing nations to declare this reality in their own best interest. This will cause rating agencies
to recognize the worthless condition of this type of debt immediately upon cessation of payment on interest due, even if the
nation in question has not declared itself bankrupt. More banking institutional downgrades in credit worthiness can be anticipated
for US financial organizations. Debts of this type, now in arrears, will have to be scheduled from non-performing to bankrupt. No
bank can pretend that this type of debt is functioning any more, if it is not.
2) The USD Index?
A: The question is no longer if the US dollar will decline below 104, but when. The US dollar, like all currencies, is the Common
Share of the country it represents. In this case, it is the public corporation, USA. As USA Inc.'s economic factors falter, so does
the value of its common share.
3) The price of gold?
A: The decision to recognize the bankruptcy of sovereign debt will via #1 and #2 above will now become a positive factor in the
price of gold.
RE: 5th Fundamental Building Block Required for Confirmation
From: Jim Sinclair
Date: Wednesday, September 25, 2002 |
